Just Deserts: Patent Troll Edition
Good news everyone! Four Patent Trolls have been hit with penalties since the Supreme Court’s Octane v. Icon decision.
In May 2014, the Supreme Court made it easier to stick patent trolls with “fee shifting.” Trial judges now have wide discretion to order patent trolls to cover the defendant’s legal costs. At least four trolls have been hit with these fee shifting penalties since May. I think we’re starting to see a trend.
The Supreme Court’s New “Fee Shifting” Rule.
In two recent cases, the US Supreme Court told judges that (a) anyone who files an “exceptionally” weak patent case should be forced to pay the defendant’s legal fees (Octane v. Icon) and that (b) appeals judges can no longer second-guess this decision (Highmark v. Allcare).
The Patent Statute has always been clear on this point: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. But under the old rules, the Federal Circuit added lots of additional requirements to this simple statute, making it nearly impossible to penalize trolls filing frivolous lawsuits. We can skip the details of the old Brooks Furniture v. Dutailier standard because you know the results: patent trolls fired off hundreds of meritless lawsuits with relative impunity.
We’re now 2 months in to new fee-shifting paradigm, and we’re already starting to see trial courts issue decisions under the new rules.
Lumen View v. FindTheBest (May 2014)
Lumen View owned a patent on some kind of computerized matchmaking system. A Federal Judge invalidated the patent last year, and then in May ordered Lumen View to pay FindTheBest.com’s legal fees.
The Judge called this a “prototypical exceptional case,” and as Julie Samuels points out, “it’s also a prototypical patent troll case.” Judge Cote’s decision on Lumen View does seem to describe a prototypical troll:
The boilerplate nature of Lumen’s complaint, the absence of any reasonable pre-suit investigation, and the number of substantially similar lawsuits filed within a short time frame, suggests that Lumen’s instigation of baseless litigation is not isolated to this instance, but is instead part of a predatory strategy aimed at reaping financial advantage from the inability or unwillingness of defendants to engage in litigation against even frivolous patent lawsuits.
The size of the penalty has not yet been determined, but Judge Denise Cote is clearly displeased with the plaintiff, concluding that “The question of whether this cased is exceptional is not close, and fee shifting in this case will ‘serve as an instrument of justice.’” Lumen View Technology, LLC v. Findthebest.com, Inc., 2014 U.S. Dist. LEXIS 74209 (SDNY May 30, 2014). That has a nice ring to it.
Fee shifting will “serve as an instrument of justice.”
Intellect Wireless v. Sharp (May 2014)
Intellect Wireless boldly claimed to have invented the camera phone. But to get its patents issued, Intellect Wireless “made affirmative, false representations to the PTO.” Essentially, they lied about the date of their invention to pre-date some prior art. Once the bogus patents were issued, Intellect Wireless filed patent infringement lawsuits against 30 different companies.
The court used the phrase “pattern of deceit” four different times to describe the plaintiff’s behavior. Among other things, Intellect Wireless made a big huff about donating its prototype camera phone to the Smithsonian. This might have been impressive, except it had actually donated “hollow imitations made of wood and plastic.” Also, Intellect Wireless essentially lied about a $5,000,000 licensing deal with Motorola to try to extract big licensing deals from other defendants.
Predictably, the court found this case “exceptional” under the new Octane/Highmark rules, and will be awarding the defendant its attorneys fees (amount to be determined). Intellect Wireless, Inc. v. Sharp Corp, 2014 U.S. Dist. LEXIS 73653 (ND Ill May 30, 2014).
Home Gambling v. Piche (May 2014).
Plaintiffs Mel Molnick and Home Gambling Network claimed to have invented online gambling. They filed at least three patent infringement cases. This particular lawsuit was “exceptionally” bad for 3 reasons:
- Plaintiff knew some of the allegedly infringing activity was taking place in Costa Rica, and that their US Patent only covers US activity.
- “Plaintiffs attempted to sue for infringement of a patent that they did not own and in fact voluntarily relinquished years earlier.”
- Plaintiffs engaged in “patent misuse” by trying to sell a license on technology wasn’t actually covered by their patent.
As a result, Home Gambling Network will be force to pay defendant’s attorneys fees (amount to be determined). Home Gambling Network, Inc. v. Piche, 2014 U.S. Dist. LEXIS 71071 (May 21, 2014 D. Nev.).
Precision Links v. USA Products (June 2014)
In this case, the plaintiffs had invented a type of adjustable bungee cord that they call “The best idea since rope.” At first, Precision Links really did sell a product. Later, they stopped selling and starting suing.
This case has had problems since the beginning. The mistakes range from misunderstanding basic patent law doctrine down to “non-compliance with the Court’s page and font limitations.” Three things made this case “exceptional”:
- Most of the asserted patent claims were “clearly frivolous”;
- Plaintiff filed a bogus motion for a preliminary injunction; and
- Plaintiff missed filing deadlines and then made up excuses that were “frivolous and baseless.”
The Court concluded that “it would be a gross injustice not to compensate the Defendants for having to defend against frivolous claims and for having to expend extra effort to counteract the Plaintiff’s frivolous litigation conduct.” Its not surprising that the court ordered plaintiff to pay defendant’s $180,000 of attorneys fees.
“It would be a gross injustice not to compensate the Defendants for having to defend against frivolous claims.”
The Court made its analysis under the new Octane/Highmark framework, but noted that it would have reached the same conclusion under the older, stricter Brooks Furniture framework. Precision Links Inc. v. USA Prods. Group, 2014 U.S. Dist. LEXIS 85694 (WD NC June 24, 2014).
Will All Trolls be Penalized Like This?
Probably not. I hope these four recent examples are the start of a trend. But there is no rule automatically makes all patent troll litigation “exceptional” and requires fee shifting penalties. Lots of Trolls file nuisance lawsuits that don’t really rise to the level of “ frivolous” or “exceptional.”
These four cases are signs of progress towards a more fair and efficient patent system. Hopefully, patent trolls will take note of this trend, and start to curb their abusive litigation tactics. As always, I’m optimistic.
